President William Ruto has called for the need to restructure the existing debt repayment policies that he argued are straining East African nations in regard to debt repayment.
Speaking during the opening of the third sitting of the third session of the 5th East African Legislative Assembly (EALA) in Parliament on Tuesday, Ruto said that the short tenure for debt maturity is a huge contributor to why many countries are struggling with debt.
To allow solid and effective economic transformation in the region, Ruto said that the extension will allow nations adequate time to mobilise resources for development and undertake development without the constraints of having to repay this debt.
He added: “Increase the grace period for money borrowed for development from 3 years to maybe 10 years. We should increase the tenure of debt for development resources not 15 years but maybe between 40 and 50 years.”
Mr Ruto went on to lament the unfair credit ratings on East African nations which denies them a fair playing field in securing enough funding.
“We need to have a conversation about credit rating agencies and a conversation about risk assessment because there is perceived risk that becomes larger than real risk,” said Ruto.
“The perceived risk is then pushed by certain quotas to make Africa uncompetitive.”
A credit rating is a credit agency’s opinion detailing the ability and willingness of an entity/country to repay its debts within the established due dates and also evaluates the likelihood of a debtor to default.
Ruto therefore tasked the Assembly to analyse the range of opportunities and the various ways in which it can complement national and regional efforts to mobilise and allocate more resources to the regional integration agenda.
“I challenge you to apply your deliberative bandwidth to the forthcoming World Bank Group’s International Development Association (IDA) Summit.”
